AMI: More Work Needed on the Corn Ethanol Mandate

Source: American Meat Institute | Nov 21, 2013

The Environmental Protection Agency’s (EPA) decision to reduce the corn ethanol mandate of the Renewable Fuel Standard (RFS) is appreciated as it acknowledges a problem exists with the current policy, according to the American Meat Institute (AMI). But more needs to be done to fix the RFS, which continues to have a detrimental impact on food prices.

“EPA’s decision to reduce the ethanol mandate is long overdue,” says AMI Vice President of Regulatory Affairs and General Counsel Mark Dopp on a call with reporters last week. “While this is a positive step, the fact remains the RFS is a flawed policy that requires congressional action. Even with a record corn crop expected this year, the damaging ripple effect of this defective policy has moved through the meat and poultry complex for the past several years. The time for congressional action is now.”

Recently released USDA data demonstrates the need for RFS reform. Food costs have outpaced other staple items during the past year, climbing 1.4% according to the consumer price index released Oct. 30. However, meat prices --which include beef, pork, poultry and eggs – rose 2.9% since September 2012. According to USDA’s September Livestock Outlook, monthly retail beef prices set successive new records in July and August with Choice beef prices reaching $5.39 per pound, while all-fresh beef reached $4.97 per pound.

These price increases have occurred over the same time frame that ethanol use has skyrocketed. Ethanol use accounted for approximately 14% of total corn use in 2005-2006 and in 2012-2013 that percentage is projected to be more than 43% of U.S. production.

“The problems created by the RFS will persist without Congress finding a lasting solution to this rigid, inflexible policy,” Dopp says.